What Virgin Islanders Should Know Before Filing their Taxes

There’s still a little bit of time left for you to get your tax return in. If you’ve put it off until the last minute, don’t worry—you’re not alone. Just make sure you have filled out all the paperwork correctly and have maximized the amount of money you stand to get back on your tax return.

Here are a few things to take into consideration before you officially file your taxes:

Income thresholds for tax brackets have gone up

First and foremost, you should be aware that the threshold that determines your tax bracket has gone up significantly. This means if you earned more than the previous tax year, you might not necessarily have moved into a higher tax bracket.

The rates for these brackets are still the same. But let’s say you fell into the 15 percent bracket last year when filing jointly with your spouse. You’d still be in that same bracket even if you earned up to $600 more than last year’s top threshold.

Be sure to look at all the new income thresholds for tax brackets before filing.

The standard deduction has increased

You can subtract the standard deduction from your gross income if you choose not to itemize, though for some people, itemizing makes more sense.

Last year, the standard deduction for a married couple filing jointly was $12,600. This year it raised $100 to $12,700. This might not seem like much of an increase, but it’s still something that will affect your taxes this year, so it’s important to take note of it.

Limits for personal exemption phase-outs increased

You are allowed to deduct a certain amount of money for each dependent (and yourself) from your income. These personal exemptions remained at the same level for this tax year. However, the exemptions are subject to phase-outs, meaning personal exemptions decrease by two percent for every $2,500 your adjusted gross income goes past a specific threshold.

These phase-out limits are adjusted for inflation, which means they increased from the 2016 tax year. Now, for example, the starting threshold is $311,300 for married taxpayers filing jointly.

HSA contributions increased

Your contributions made to a health savings account lower your taxable income. This money can be used to pay for certain medical expenses. There is a yearly limit to the amount of pretax money you can contribute to your HAS, but that limit went up in 2017 by $50. Again, while that’s not a significant figure, every little bit can count when it comes to reducing your taxable income.

Estate tax increased

Under the Republican Tax Cuts and Jobs Act, the estate tax will soon be eliminated. But for now, the threshold for the estate tax has increased for the 2017 tax year. The value of the estate must exceed $5.49 million before any estate taxes are applied to it.

For more information about things you should know before filing your taxes, contact an experienced tax planning attorney in the U.S. Virgin Islands.

Adam N. Marinelli is an attorney in Corporate, Tax & Estate Planning Practice Group at BoltNagi PC, a full service business law firm serving the U.S. Virgin Islands.